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Local Government Finance

Part of the debate – in Westminster Hall at 9:56 am on 3rd April 2001.

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Photo of David Kidney David Kidney Labour, Stafford 9:56 am, 3rd April 2001

I congratulate Mr. Darvill on securing this important debate and on his thoroughly reasonable and constructive presentation. Yes, he made special pleas for the London borough of Havering; however, his grasp of the underlying circumstances in that borough shows that he has made a genuine effort to understand the complexities of local government finance.

I begin my discussion of some of the criticisms of the present system and why reform is necessary by referring to my hon. Friend's fifth criticism about the formula for funding local government from Government funds. That regressive formula goes back to a period in 1990 and seals in the pattern of spending that was then current. It means that the whole system is trapped in a time warp and that local authorities can do nothing to change their situations.

My special pleading is for the local authority of Staffordshire. In the league table of funding for shire counties, Staffordshire is always at No. 34 of 35. Unlike those in a football league table, the authority cannot raise its position by improving its performance. That is absolutely contrary to my idea of a modern system of local government finance.

Another criticism of the present system is the introduction into the formula of factors that are not objectively justified. The most obvious one is the area cost adjustment, which my hon. Friend mentioned. A couple of years ago, I asked the House of Commons Library for some details on how Staffordshire has been affected by not being eligible for the area cost adjustment, which is drawn in a ring around south-east England. I was given an indication of how Staffordshire has suffered. In 1999-2000, the standard spending assessment for Staffordshire county council would have been about £28.6 million--or 5.4 per cent.--higher, if area cost adjustment figures equal to the arithmetic mean for those counties with an area cost adjustment factor of more than one had been applied. Staffordshire was £28.6 million worse off in that one year alone, simply because of exclusion from a formula for dishing out money. Staffordshire was denied that considerable chunk of spending.

Additional educational need is another element in Staffordshire--that need is thought to lack credibility. Parents of schoolchildren in Staffordshire often make comparisons with other parts of the country--not so much the London boroughs to which my hon. Friend referred, such as Hackney or Havering, but Hertfordshire in south-east England, which many people would say is similar to Staffordshire. Funding in Hertfordshire is between £200 and £300 higher per pupil than in Staffordshire, although the education service is the same.